Methods and systems for portfolio cash flow valuation

ABSTRACT

In an exemplary embodiment, invention is a method for analyzing portfolios of distressed financial assets for the purpose of bidding to acquire those assets. The method utilizes a network-based system including a server system coupled to a centralized database and at least one client system. The method comprises of various steps from generating cash flow data table from variety of data sources to performing sensitivity analysis using Monte Carlo Simulation Model to provide different scenarios. The method utilizes a variety of assumptions in performing analysis, and exports cash flow projections into a pre-determined format to develop financially attractive bids, which have strong probability of, expected return on investment after taking into account a variety of foreseeable risks.

[0001] A portion of the disclosure of this patent document containsmaterial that is subject to copyright protection. The copyright ownerhas no objection to the facsimile reproduction by anyone of the patentdocument or the patent disclosure, as it appears in the Patent andTrademark Office patent file or records, but otherwise reserves allcopyright rights whatsoever.

BACKGROUND OF THE INVENTION

[0002] This invention relates generally to valuation methods forfinancial instruments and more particularly to analyzing portfolios ofdistressed financial assets for the purpose of bidding to acquire thoseassets.

[0003] A large number of assets such as loans, e.g., ten thousand loansor other financial instruments, sometimes become available for sale dueto economic conditions, the planned or unplanned divestiture of assetsor as the result of legal remedies. These assets are often referred toas distressed financial assets. The sale of thousands of commercialloans or other financial instruments sometimes involving the equivalentof billions of dollars in assets must sometimes occur within a fewmonths. Of course, the seller of assets wants to optimize the value ofthe portfolio, and will sometimes group the assets in “tranches.” Theterm “tranche” as used herein is not limited to foreign notes but alsoincludes assets and financial instrument groupings regardless of countryor jurisdiction.

[0004] Bidders may submit bids on all tranches, or on only sometranches. In order to win a tranche bid, a bidder typically must submitthe highest bid for that tranche. In connection with determining a bidamount to submit on a particular tranche, a bidder often will performdue diligence, such as engaging underwriters to evaluate as many loansas possible within a tranche and within the available limited time. Whenthe time for submitting a bid is about to expire, the bidder willevaluate the loans underwritten at that time, and then attempt toextrapolate a value to the loans that have not yet been analyzed by theunderwriters.

[0005] As a result of this process, a bidder may significantlyundervalue a tranche and submit a bid that is not competitive or bidhigher than the underwritten value and assume unquantified risk. Sincethe objective is to win each tranche at a price that enables a bidder toearn a return, losing a tranche due to significant undervaluation of thetranche represents a lost opportunity.

[0006] Currently, business enterprises assess an acquisition or sale ofassets and portfolios of assets on rapid schedules and often at greatdistances and varying time zones from the general management teams andfunctional heads which typically approve the offers for purchase or saleof these assets. Employees, partners and collaborators associated withdue diligence regarding the purchase of the assets are typically broughttogether for a relatively short duration of time to accomplish the duediligence. Typically due diligence activities are conducted in physicalproximity to the sources of information associated with the assets. Thecollaborating personnel often do not have the benefit of training orknowledge of the complete set of analytical tools at their disposal nordo they have “best practices” from previous efforts of a similar nature.

[0007] Consolidation of employees and collaborators into a remotephysical location for the duration of the due diligence effort is timeconsuming and expensive. In addition, persons on due diligence teamssearch for data and processes in an ad hock fashion, typically relyingon a small subset of other personnel who have detailed information aboutinformation sources, underwriting, analytical tools, reports, andcompleted analysis. The subset of individuals who have the informationbecome bottlenecks within a due diligence time line, driving up duediligence costs and adding time that could have otherwise been investedin more value added due diligence.

[0008] In summary, there are several factors that typically prevent asubstantive analysis on portfolios of distressed financial assets. Someof these factors include incomplete information, limited time to biddate, alternative possible dispositions or resolutions of each asset,expense associated with gathering information, issues related tounderwriting and legal, variation of expected assets resolution tinting,uncertain future expenses related to collection on assets, large numberof assets in a portfolio and model development for financial analysis.

BRIEF SUMMARY OF THE INVENTION

[0009] In one aspect, an integrated Internet based system for managingportfolio cash valuation is provided. The system includes at least onecomputer, and at least one server. The computer is connected to servervia a network and is configured to store accumulated assumptions andknowledge in a repository from a prior portfolio cash evaluation, applyconsolidated analytical tools to evaluate the portfolio of assets, andgenerate management reports that analyze the portfolio. In an exemplaryembodiment, the system includes a database, which may be utilized tostore assumptions and retrieve as necessary. The server is furtherconfigured with consolidated analytical tools including at least one ofa Cash Flow Model, a Monte Carlo Simulation Model and a FinancialAnalysis Model. In an exemplary embodiment, these models reside on aclient system operationally. In another exemplary embodiment, the CashFlow Model, the Monte Carlo Simulation Model and the Financial AnalysisModel can reside on the server for distribution to client systems. TheFinancial Model is capable of exporting data from the cash flow model ina predefined format for use in a financial model. The server is furtherconfigured with a suite of at least one of business processes, computersystems, analytical tools, data manipulation tools, business processtools, methodologies and analytics. In an exemplary embodiment, theserver is further configured with a database that accumulates andorganizes data relating to at least one Bank Records, Credit Agencies,Government Agencies, Legal Documents and Contracts, and UnderwritingReports.

[0010] In another aspect, a method for analyzing portfolios ofdistressed financial assets for the purpose of bidding to acquire thoseassets is provided. The method utilizes a network-based system includinga server system coupled to a centralized database and at least oneclient system. The method comprises the steps of generating a cash flowdata table from various data sources, importing cash flow data from thedata table into a cash flow model, automatically segmenting cash flowdata by potential asset disposition types utilizing the cash flow model,applying disposition specific cash flow and expense timings based oncash flow model assumptions and rolling up discounted projections intototal deal level cash flow projections, performing a sensitivityanalysis using a Monte Carlo Simulation Model to provide differentscenarios based on a variety of assumptions retrieved from the database,and exporting cash flow projections into a pre-determined format todevelop financially attractive bids, which have strong probability ofexpected return on investment after taking into account a variety offoreseeable risks.

[0011] In yet another aspect, a computer program embodied on a computerreadable medium is provided. The computer program includes a codesegment that sets up a directory structure to organize information intoa centralized database and provides users access to a specific set ofdata stored in the centralized database to facilitate decision making inresponse to an inquiry. Additionally, the computer program includes acode segment that downloads valuation assessment from the database,develops monthly income projections from individual loan valuations,develops monthly expense projections from pre-determined assetmanagement scenarios, aggregates loan cash flows into portfolio cashflows, adjusts portfolio cash flow expenses against pre-determined assetmanagement targets, calculates financial ratios for asset managementplanning, simulates various scenarios based on pre-defined assumptions,and calculates confidence assessment for portfolio investment.

[0012] In yet a further aspect, a centralized database is provided whichincludes data corresponding to at least one of Cash Flow Data,Assumptions Data, Potential Asset Disposition Type Data, StandardizedData, and Worksheets & Code Modules Data, data corresponding tofinancial models and business process tools, data corresponding to bestpractices, and data corresponding valuation process and underwriting. Inyet another aspect, a method for analyzing a deal utilizing a borrowerlevel pricing process is disclosed. The method includes calculating aborrower-specific price for each borrower in the portfolio, determininginfluence of each borrower on a given portfolio utilizing influencemetrics, and selecting a group of borrowers based on borrowersindividual ranking for further review.

BRIEF DESCRIPTION OF THE DRAWINGS

[0013]FIG. 1 is a block diagram of a Portfolio Cash Valuation System(PCVS) that includes a server sub-system and a plurality of customerdevices connected to the server system;

[0014]FIG. 2 is an expanded version block diagram of an exemplaryembodiment of a server architecture of the PCVS;

[0015]FIG. 3 shows a configuration of a database within a databaseserver of the server system shown in FIG. 1;

[0016]FIG. 4 is an exemplary embodiment of a logical structure of thePCVS (shown in FIGS. 1 and 2);

[0017]FIG. 5 describes a portfolio bidding process as implemented by thePCVS;

[0018]FIG. 6 describes, in one exemplary embodiment, a various processsteps utilized by the PCVS in developing a bid that is financiallysound;

[0019]FIG. 7 is a diagram illustrating an overlap of the portfoliobidding process (shown in FIG. 5) and various process steps (shown inFIG. 6) utilized by the PCVS in developing a bid that is financiallysound;

[0020]FIG. 8 is an exemplary embodiment of the process steps to createcash flow data table, also referred to as database 178 (shown in FIG. 5)from various data sources (shown in FIG. 5);

[0021]FIG. 9 is an exemplary embodiment of a user interface displayingthe imported data from the cash flow model (shown in FIG. 5);

[0022]FIG. 10 is an exemplary embodiment of a spreadsheet depicting theraw data, which were inputted into the database;

[0023]FIG. 11 is an exemplary embodiment of an Assumption Sheet alsoreferred to as Assumption Data Sheet or Assumption Worksheet;

[0024]FIG. 12 is an exemplary embodiment of a spreadsheet depicting aroll up disposition cash flow into portfolio cash flow;

[0025]FIG. 13 is an exemplary embodiment of simulation results; and

[0026]FIG. 14 is an exemplary embodiment of a spreadsheet showingpossible result distributions based on uncertainty and variability offuture cash flows.

DETAILED DESCRIPTION OF THE INVENTION

[0027] Exemplary embodiments of systems and processes that facilitateintegrated network-based electronic reporting and workflow processmanagement related to a Portfolio Cash Valuation System (PCVS) aredescribed below in detail. The systems and processes facilitate, forexample, electronic submission of information using a client system,automated extraction of information, and web-based assessment reportingand management.

[0028] The systems and processes are not limited to the specificembodiments described herein. In addition, components of each system andeach process can be practiced independent and separate from othercomponents and processes described herein. Each component and processalso can be used in combination with other components and processes.

[0029] In an exemplary embodiment, the application is implemented as aCentralized Database utilizing a Structured Query Language (SQL) with aclient user interface front-end for administration and a web interfacefor standard user input and reports. The application is web enabled andruns on a business entity's intranet. In a further exemplary embodiment,the application is fully accessed by individuals having authorizedaccess outside the firewall of the business entity through the Internet.In another exemplary embodiment, the application is run in a Windows NTenvironment or simply on a stand alone computer system. In yet anotherexemplary embodiment, the application is practiced by simply utilizingspreadsheet software or even through manual process steps. Theapplication is flexible and designed to run in various differentenvironments without compromising any major functionality.

[0030]FIG. 1 is a block diagram of PCVS 10 that includes a serversub-system 12, sometimes referred to herein as server 12 or serversystem 12, and a plurality of customer devices 14 connected to server12. PCVS 10 can be applied to distressed asset portfolio analysis.Computerized modeling and grouping tools, as described below in moredetail, are stored in server 12 and can be accessed by a requester atany one of computers 14. In one embodiment, devices 14 are computersincluding a web browser, and server 12 is accessible to devices 14 via anetwork such as an intranet or a wide area network such as the Internet.In an alternative embodiment, devices 14 are servers for a network ofcustomer devices. Customer device 14 could also be any client systemcapable of interconnecting to the Internet including a web based digitalassistant, a web-based phone or other web-based connectable equipment.In another embodiment, server 12 is configured to accept informationover a telephone, for example, at least one of a voice responsive systemwhere a user enters spoken data, or by a menu system where a user entersa data request using the touch keys of a telephone as prompted by server12.

[0031] Devices 14 are interconnected to the network, such as a localarea network (LAN) or a wide area network (WAN), through many interfacesincluding dial-in-connections, cable modems and high-speed lines.Alternatively, devices 14 are any device capable of interconnecting to anetwork including a web-based phone or other web-based connectableequipment. Server 12 includes a database server 16 connected to acentralized database 20. In one embodiment, centralized database 20 isstored on database server 16 and is accessed by potential customers atone of customer devices 14 by logging onto server sub-system 12 throughone of customer devices 14. In an alternative embodiment, centralizeddatabase 20 is stored remotely from server 12.

[0032] In one exemplary embodiment, PCVS 10 is configured to storeaccumulated assumptions and knowledge in a repository from a priorportfolio cash evaluation, apply consolidated analytical tools toevaluate the portfolio of assets, and generate management reports thatanalyze the portfolio. In an exemplary embodiment, system 10 utilizesdatabase 20 to store assumptions and retrieve as necessary. Server 12 isfurther configured with consolidated analytical tools including at leastone of a Cash Flow Model, a Monte Carlo Simulation Model and a FinancialAnalysis Model. In an exemplary embodiment, these models reside on acustomer devices 14 operationally. In another exemplary embodiment, theCash Flow Model, the Monte Carlo Simulation Model and the FinancialAnalysis Model can reside on server 12 for distribution to customerdevices 14. The Financial Model is capable of exporting data from thecash flow model in a predefined format for use in a financial model.Server 12 is further configured with a suite of at least one of businessprocesses, computer systems, analytical tools, data manipulation tools,business process tools, methodologies and analytics. In an exemplaryembodiment, server 12 is further configured with a database thataccumulates and organizes data relating to at least one Bank Records,Credit Agencies, Government Agencies, Legal Documents and Contracts, andUnderwriting Reports.

[0033] In yet another exemplary embodiment, server 12 is configured toexecute a computer program embodied on a computer readable medium.Customer device 14 accesses the computer program that has been stored onserver 12 to analyze portfolios using portfolio cash valuation analysis.The computer program includes a code segment that sets up a directorystructure to organize information into a centralized database andprovides users access to a specific set of data stored in thecentralized database to facilitate decision making in response to aninquiry. Additionally, the computer program includes a code segment thatdownloads valuation assessment from the database, develops monthlyincome projections from individual loan valuations, develops monthlyexpense projections from pre-determined asset management scenarios,aggregates loan cash flows into portfolio cash flows, adjusts portfoliocash flow expenses against pre-determined asset management targets,calculates financial ratios for asset management planning, simulatesvarious scenarios based on pre-defined assumptions, and calculatesconfidence assessment for portfolio investment.

[0034]FIG. 2 is an expanded version block diagram of an exemplaryembodiment of a server architecture of a PCVS 22. PCVS 22 is implementedfor the complex environment. Components in PCVS 22, identical tocomponents of system 10 (shown in FIG. 1), are identified in FIG. 2using the same reference numerals used in FIG. 1. PCVS 22 includesserver sub-system 12 and customer devices 14. Server sub-system 12includes database server 16, an application server 24, a web server 26,a fax server 28, a directory server 30, and a mail server 32. A diskstorage unit 34 is coupled to database server 16 and directory server30. Servers 16, 24, 26, 28, 30, and 32 are coupled in a local areanetwork (LAN) 36. In addition, a system administrator workstation 38, aworkstation 40, and a supervisor workstation 42 are coupled to LAN 36.Alternatively, workstations 38, 40, and 42 are coupled to LAN 36 via anInternet link or are connected through an intranet.

[0035] Each workstation 38, 40, and 42 is a personal computer includinga web browser. Although the functions performed at the workstationstypically are illustrated as being performed at respective workstations38, 40, and 42, such functions can be performed at one of many personalcomputers coupled to LAN 36. Workstations 38, 40, and 42 are illustratedas being associated with separate functions only to facilitate anunderstanding of the different types of functions that can be performedby individuals having access to LAN 36.

[0036] Server sub-system 12 is configured to be communicatively coupledto various individuals or employees 44 and to third parties, e.g., acustomer 46 via an ISP Internet connection 48. The communication in theexemplary embodiment is illustrated as being performed via the Internet,however, any other wide area network (WAN) type communication can beutilized in other embodiments, i.e., the systems and processes are notlimited to being practiced via the Internet. In addition, and ratherthan a WAN 50, local area network 36 could be used in place of WAN 50.

[0037] In the exemplary embodiment, any employee 44 or customer 46having a workstation 52 can access server sub-system 12. One of customerdevices 14 includes a workstation 54 located at a remote location.Workstations 52 and 54 are personal computers including a web browser.Also, workstations 52 and 54 are configured to communicate with serversub-system 12. Furthermore, fax server 28 communicates with employees 44and customers 46 located outside the business entity and any of theremotely located customer systems, including a customer system 56 via atelephone link. Fax server 28 is configured to communicate with otherworkstations 38, 40, and 42 as well.

[0038] The systems described in FIGS. 1 and 2 are configured toimplement a methodology to analyze distressed portfolios, based uponactual historical cost data, predicted operations and cost data andactual cost data, where applicable. By determining a likely expensesstream, a net present value can be placed on the portfolios and itsunderlying assets and establish target bids that will result intoprofitability, if accepted.

[0039]FIG. 3 shows a configuration of database 20 within database server16 of server system 12 shown in FIG. 1. Database 20 is coupled toseveral separate components within server system 12. These separatecomponents perform specific tasks as required to achieve the systemfunctionality.

[0040] Server system 12 includes a collection component 64 forcollecting information from users into centralized database 20, atracking component 66 for tracking information, a displaying component68 to display information, a receiving component 70 to receive aspecific query from client system 14, and an accessing component 72 toaccess centralized database 20. Receiving component 70 is programmed forreceiving a specific query from one of a plurality of users. Serversystem 12 further includes a processing component 76 for searching andprocessing received queries against data storage device 34 containing avariety of information collected by collection component 64. Aninformation fulfillment component 78, located in server system 12,downloads the requested information to the plurality of users in theorder in which the requests were received by receiving component 70.Information fulfillment component 78 downloads the information after theinformation is retrieved from data storage device 34 by a retrievingcomponent 80. Retrieving component 80 retrieves, downloads and sendsinformation to client system 14 based on a query received from clientsystem 14 regarding various alternatives.

[0041] Retrieving component 80 further includes a display component 84configured to download information to be displayed on a client system'sgraphical user interface and a printing component 88 configured to printinformation. Retrieving component 80 generates various reports requestedby the user through client system 14 in a pre-determined format. System10 is flexible to provide alternative reports and is not constrained tothe options set forth above.

[0042] In an exemplary embodiment, database 20 is divided into a CashFlow Data Section (CFDS) 90, Models Algorithm Section (MAS) 92,Assumptions Section (AS) 94, Standardized Data section (SDS) 96, andWorksheets & Code Modules Section (WCMS) 98. Sections 90, 92, 94, 96 and98 within database 20 are interconnected to update and retrieve theinformation as required. Each Section is further divided into severalindividualized sub-sections to store data in various differentcategories. In yet another exemplary embodiment, customized sections aredeveloped using key evaluation metrics.

[0043] The architecture of system 10 as well as various components ofsystem 10 are exemplary only. Other architectures are possible and canbe utilized in connection with practicing the processes described below.

[0044]FIG. 4 is an exemplary embodiment of a logical structure 108 ofPCVS 10 (shown in FIG. 1) and PCVS 22 (shown in FIG. 2). The PCVSintegrates a Structured Database Table 110, a Cash Flow Model 112, and aMonte Carlo Simulation Model 114 to perform the portfolio analysis andprovide recommendations to management based on results obtained from theanalysis. Database table 110 resides in a relational database designedto standardize the collection and organization of many disparate datasources 116 typically required to properly analyze a large portfolio ofassets; (bank records, credit agencies, government agencies, legaldocuments, underwriting reports, etc.). As part of the data analysisprocess, database table 110 of projected potential recoveries ispopulated. In an exemplary embodiment, database table 110 is queriedfrom the EXCEL application to import data records into cash flow model112.

[0045] Cash flow model 112, also referred to as a Portfolio CashValuation Model, includes several worksheets and a series of codemodules 118. The code modules control querying the database andprocessing the retrieved data records.

[0046] In an exemplary embodiment, code modules are developed usingVisual Basic. Visual Basic is a programming language and environmentdeveloped by Microsoft Corporation. Based on the BASIC language, VisualBasic was one of the first products to provide a graphical programmingenvironment and a paint metaphor for developing user interfaces. Insteadof worrying about syntax details, the Visual Basic programmer can add asubstantial amount of code simply by dragging and dropping controls,such as buttons and dialog boxes, and then defining their appearance andbehavior.

[0047] However, code modules can be generated using any commercializedavailable software programs. Cash flow model 112 worksheets are arrangedinto four main categories of worksheets:

[0048] a) Data Sheet—Data sheet holds records retrieved from thedatabase for distribution to resolution sheets. Resolution sheets areoften referred to as Disposition sheets. Resolution or Dispositionsheets describe various disposition asset types. Data sheet containsseveral additional calculated fields derived from the imported recordsand assumption sheet parameters.

[0049] b) Assumptions Sheet—Assumptions sheets are input sheet forvarious model parameters such as interest rates, legal fees, expenses,exchange rates, discount rates and various other parameters that areimportant in predicting the future situation.

[0050] c) Cash flow sheet—Cash flow sheet is the net present value modelof aggregate projections of cash flows and expenses by likely assetdisposition type.

[0051] d) Disposition Sheets—Disposition sheet is one sheet for eachpossible asset disposition strategy that may be employed in the assetcollection effort. Possible disposition of assets are, but not limitedto, Discounted Cash Payment or Discounted Pay Off (DPO) Disposition,Inferred Disposition, Loan Restructure Disposition, ComplianceDisposition, Litigation with Foreclosure Disposition, Litigation withRestructure Disposition, and Deed In Lieu Disposition. Other dispositiontypes may be developed depending on the type of the assets within theportfolio and the business needs.

[0052] Monte Carlo Simulation Model 114 is used with the assumptions andcash flow worksheets to perform sensitivity and “what if” analysis 120on the projected cash flows. This allows for the impact of variation inthe expected timing of recoveries, amount of recoveries, interest rates,expenses, and other variables to be analyzed. Simulation Model 114provides a probabilistic distribution of possible portfolio value thatincorporates the risk associated with uncertainty of future events.

[0053]FIG. 5 describes a portfolio bidding process 160 as implemented byPCVS 10. Portfolio bidding process 160 begins 162 inputting requiredinformation relating to portfolio and its underlying assets includingbut not limited to identifying a Borrower Identification Code, a LoanIdentification Code, Strategy description defining Disposition Type,Timing of Payments and other related information. Data Sources 164includes the information relating to the portfolio and its underlyingassets and information from loan underwriters 168, Knowledge Capturedfrom Previous Transactions 170, and Inference Data obtained fromNon-Sampled Assets 172. Data sources 164 are updated constantly andbecome part of a Database 178. Next step requires importing cash flowdata from database 178 into Portfolio Cash Flow Valuation Model 180(also shown in FIG. 4 as reference numeral 112). The user controlledquery allows for segments of the portfolio or pool of assets to beevaluated separately. In an exemplary embodiment, Portfolio Cash FlowValuation Model 180 automatically segments data by potential dispositiontypes. Model 180 can also handle mixed disposition types of assets. Oncethe analysis is completed as explained below (in FIG. 6), cash flowmodel's projections are exported in the proper format into a FinanceModel 184 for developing a Bid 186 for submission.

[0054] In an exemplary embodiment, a Borrower-level Pricing Process isimplemented by PCVS 10. Borrower level Pricing Process is a module or asub-set of the Cash Flow Model. In addition to retaining all thefunctionality of the Cash Flow Model, Borrower Level Pricing Processimplements a looping feature that allows the user to run the Cash FlowModel for every borrower in the portfolio (as if a borrower were aportfolio of one), thereby calculating each borrower's net present valueof cash flows, i,e. each borrower's price. The looping feature allowsthe user to run an analysis for any subset of portfolio, and calculatethe subset's price, sensitivities, total expenses, etc. Once theborrower level pricing is determined, the system can calculate the priceinfluence (also refereed to as “influence”) of each borrower'sindividual price, on the entire portfolio's price by utilizing“influence metrics”.

[0055] More specifically, in addition to a determination of a portfoliolevel price, a loop has been built into algorithm to calculate aborrower-specific price for each borrower in the portfolio. The Borrowerlevel Pricing process includes clearing the database and sorting thedatabase by borrower identification codes (i.e. Borrower Id's). All therecords associated with each individual Borrower Id's are rolled up toget the overall contribution by each borrower for a given portfolio. Thesubsequent step of the process further includes price influence rankingwhich relates to determining influence of each borrower on a givenportfolio. Price influence of a particular borrower is determined using:$p_{(i)} = \frac{\sum\limits_{j \neq i}{p_{j}B_{j}}}{\sum\limits_{j \neq i}B_{j}}$

[0056] is borrower i's deleted price (price of portfolio withoutborrower i)

[0057] where

[0058] p_(i) borrower i price, and B_(i) is the borrower i unpaidbalance

[0059] Then$I_{(i)} = {p_{(i)} - \frac{\sum\limits_{j}{p_{j}B_{j}}}{\sum\limits_{j}B_{j}}}$

[0060] is borrower i's price influence. If I>0, then borrower i is pricedeflationary, while if I<0, then borrower i is price inflationary. Rankordering price influence for every borrower illuminates the pricesensitivity to individual borrower pricing.

[0061] In an exemplary embodiment, price influence of a particularborrower is determined using “influence metrics”. The “influencemetrics” are developed based on historical experience in dealing withvarious portfolios. Once the price influence ranking is developed foreach borrower based on influence metrics, the borrowers are rank-orderedaccording to their individual ranking. The most influential borrowersare then selected for further review. The process offers significantcompetitive pricing advantage and shortens the time needed for portfolioevaluation. The process adds accuracy and consistency in development ofsuccessful bids by focusing on borrowers that are most influential.

[0062]FIG. 6 describes, in one exemplary embodiment, a various processsteps 190 utilized by PCVS 10 in developing a bid that is financiallysound. Process steps 190 utilize six different steps. Step One 192, inone exemplary embodiment, includes generating cash flow data table, alsoreferred to as database 178 (shown in FIG. 5) from various data sources164 (shown in FIG. 5). Data Sources 164 includes the informationrelating to portfolio and its underlying assets, information from loanunderwriters 168 (shown in FIG. 5), Knowledge Captured from PreviousTransactions 170 (shown in FIG. 5), and Inference Data obtained fromNon-Sampled Assets 172 (shown in FIG. 5). Data sources 164 are updatedconstantly and become part of a Database 178. Step Two 194 involvesimporting cash flow data from data table 178 into cash flow valuationmodel 180 (shown in FIG. 5) utilizing EXCEL VBA program. Cash flowvaluation model 180 is also referred to as Portfolio Cash Flow ValuationModel 180. The user controlled query allows the user to segmentportfolio or pool of assets that need to be evaluated separately. StepThree 196 utilizes Portfolio Cash Flow Valuation Model 180 toautomatically segment data by potential asset disposition types. In anexemplary embodiment, possible disposition of assets are, DiscountedCash Payment or Discounted Pay Off (DPO) Disposition, InferredDisposition, Loan Restructure Disposition, Compliance Disposition,Litigation with Foreclosure, Litigation with Restructure Disposition,and Deed In Lieu Disposition. Although model 180 can segment data by aspecific disposition type, the model with minor adjustments can alsohandle mixed dispositions. Step Four 198, then includes, applyingdisposition specific cash flow and expense timings based on modelassumptions and rolling up discounted projections into a total deallevel cash flow projections. Step Five 200 includes performingsensitivity analysis using Monte Carlo Simulation Model 114. Thisanalysis is often referred to as a “What-If” analysis. This analysisprovides different scenarios to the management based on differentassumptions related to key parameters. PCVS 10 retrieves assumptions onwhich various scenarios are developed from the assumptions input sheet(discussed below). Step Six 202, exports cash flow model projectionsinto the proper format for use by the Finance Model 184 (shown in FIG.5) to develop bids 186 (shown in FIG. 5) that are financially attractiveand provides strong probability of expected return on investment aftertaking into account foreseeable risks.

[0063]FIG. 7 is a diagram illustrating an overlap of portfolio biddingprocess 160 (shown in FIG. 5) and various process steps 190 (shown inFIG. 6) utilized by PCVS 10 in developing a bid that is financiallysound.

[0064]FIG. 8 is an exemplary embodiment of process steps 220 to createcash flow data table, also referred to as database 178 (shown in FIG. 5)from various data sources 164 (shown in FIG. 5). Various queries are ranto create cash flow data from database 178, which in turn generates cashflow table. Data queried from database 178 is placed into a dataworksheet in the model 180 workbook.

[0065]FIG. 9 is an exemplary embodiment of a user interface 230displaying the imported data from the cash flow model 180 (shown in FIG.5). A Load Cash Flow Model 232 button imports data into the cash flowmodel 180. A Move Data 234 button performs required computations anddisplays what is being shown in user interface 230. Move Data 234command executes the “Move To Disposition” function. Move Data 234command transfers each record data to the proper disposition type. FIG.10 below, in an exemplary embodiment, depicts the raw data, which wereinputted into database 178. Appropriate assumptions are retrieved fromthe assumption worksheet shown in FIG. 11 below. Expected Cash flow andNet Present Value (NPV) are computed based on received cash flowinformation, expenses and timings. The actual data are utilized as andwhen possible. However, when actual data are not available, model 180retrieves necessary data from the assumption worksheet, shown in FIG. 11to complete the analysis.

[0066] A VBA routine displays list of asset pools, or the user canselect a specific pool of assets out of possible disposition of assetssuch as Discounted Cash Payment or Discounted Pay Off (DPO) Disposition236, Inferred Disposition 238, Loan Restructure Disposition 240,Compliance Disposition 242, Litigation with Foreclosure Disposition 244,Litigation with Restructure Disposition 246, and Deed In LieuDisposition 248. Alternatively, the user can select to view allavailable records by selecting a Cash Flow 250 tab. Each of thesedisposition types is available for viewing under the specific tabidentified in FIG. 9.

[0067] Explanations of the calculation of the various disposition typesare discussed below. However, it is important to note that theunderlying explanations are for a specific point in time on a specificdeal (or a transaction) and are only exemplary in nature. Minoradjustments may be made to these methodologies to accommodate a new dealdepending on a Country where the transaction is being undertaken, Taxstructure of the country, county and state, Tax and other Legalexpenses, and general expenses based on the deal size. The modelprovides flexibility to accommodate these changes and provides reliableNPV and Return on Investment (ROI) values.

DISCOUNTED PAY OFF (DPO) DISPOSITION 236

[0068] DPO records are contained in the DPO Disposition 236 tab. DPOstrategy involves two potential cash payments at two different timings,T1 and T2. Expenses are incurred at T1 and T2. Total outstanding UnpaidBalance (UPB) decreases as payments are received. The aggregate cashflows and expenses are totaled at the top of the worksheet.

[0069] Timings:

[0070] Various timings are obtained as part of the underwriting datafrom the database 178. The timings are adjusted during the “move data”function utilizing the “Delays by UPB bin” section on the assumptionsworksheet (shown in FIG. 11). Each record's payment and expense timingsare adjusted based on the UPB bin that the record is associated with.

[0071] Expenses:

[0072] Legal expenses are incurred at the time of the cash payments.Legal expenses are calculated as a percentage of the recovered amount.The percentage used is obtained from the “Legal fees based on %recovered UPB.” DPO expenses are calculated during the “move data”function and placed in the expense section of the DPO Disposition 236tab according the payment timing.

[0073] All legal expenses are adjusted using the Value Added Tax (VAT)located on the assumptions worksheet.

[0074] EXAMPLE:

[0075] Expected Recovery (ER) is the amount realized from the borroweror a debtor. In other words, ER is the payment from the borrower. In anexemplary embodiment, let us assume that for, ER=$842,238, the borroweris expected to make payments at Time period T1 (T1)=12 and at Timeperiod T2 (T2) =18. Based on the facts of a specific scenario,ReSecured=1 implying that the loan is secured by the real property. Inother words, there is a collateral. Based on these facts, the Resultscomputed by the model are as follows:

[0076] Cash payment at Time Period 12 of $421,119

[0077] Cash payment at Time Period 18 of $421,119

[0078] Expenses are retrieved from assumption worksheet stored indatabase 178. For example, to obtain Legal Expenses at T1, the modelretrieves the data from “legal ReSecured” and determines that the legalexpenses are 13.8% of Cash payment at $421,111, which is $58,114 Million($421,111 Million multiplied by 0.138 factor retrieved from theassumption worksheet). Similarly, Legal Expenses at T2 are 13.8% of Cashpayment at $421,118, which is $58,114 Million ($421,111 Millionmultiplied by 0.138 factor retrieved from the assumption worksheet).

INFERRED DISPOSITION 238

[0079] Inferred records are contained in the Inferred Disposition 238tab. Inferred strategy involves two potential cash payments, T1 and T2.Expenses are incurred at T1 and T2. Total outstanding Unpaid Balance(UPB) decreases as payments are received. The aggregate cash flows andexpenses are totaled at the top of the worksheet.

[0080] Timings:

[0081] Various timings are obtained as part of the underwriting datafrom the database 178. The timings are adjusted during the “move data”function utilizing the “Delays by UPB bin” section on the assumptionsworksheet (shown in FIG. 11). Each record's payment and expense timingsare adjusted based on the UPB bin that the record is associated with.

[0082] Expenses:

[0083] Legal expenses are incurred at the time of the cash payments.Legal expenses are calculated as a percentage of the recovered amount.The percentage used is obtained from the “Legal fees based on %recovered UPB.” Inferred expenses are calculated during the “move data”function and placed in the expense section of the Inferred Disposition238 tab according the payment timing.

[0084] All legal expenses are adjusted using the Value Added Tax (VAT)located on the assumptions worksheet.

[0085] EXAMPLE:

[0086] For, Expected Recovery (ER)=$1,092.52, Time period T1 (T1)=26,Time period T2 (T2)=48, ReSecured=1; the Results computed by the modelare as follows:

[0087] Cash payment at Time Period 26 of $1073.00

[0088] Cash payment at Time Period 48 of $19.52

[0089] Expenses are retrieved from assumption worksheet stored indatabase 178. For example, to obtain Legal Expenses at T1, the modelretrieves the data from “legal ReSecured” and determines that the legalexpenses are 23% of Cash payment at $1073.00, which is $246.8 Million($1073 Million multiplied by 0.23 factor retrieved from the assumptionworksheet). Similarly, Legal Expenses at T2 are 23% of Cash payment at$19.52, which is $4.49 Million ($19.52 Million multiplied by 0.23 factorretrieved from the assumption worksheet).

LOAN RESTRUCTURE DISPOSITION 240

[0090] Restructured loans Disposition records are contained in“Restruct” 240 tab. Restructured loans strategy involves a possible cashpayment “T1” and a stream of future payments associated with the newrestructured loan. The restructured loan may involve a principlemoratorium period where in only interest payments are made.

[0091] The cash flows that result from the restructured loan arecontained in two sections of the worksheet. The first section containsthe T1 cash payment and the principle payments associated with the loan.This section also contains a cash payment associated with any remainingprinciple value beyond the term of the analysis (48 months), theremaining value is discounted back at a separate “Residual valuediscount rate” located on the assumptions sheet. Principle payments arecalculated using the PPMT excel function. The second section containsthe interest payments associated with the loan. The interest rate isobtained from the “Assumed interest rate (Monthly)” value on theassumptions sheet. The IPMT excel function is used to calculate theinterest portion of the cash flow stream. Details pertaining to PPMT andIPMT functions, Timings, Expenses, and an illustrative Exampledescribing methodology are summarized in Appendix—A.

COMPLIANCE DISPOSITION 242

[0092] Compliance Disposition records are contained in “Compliance” 242tab. Compliance records are handled in the same fashion as the DPOstrategy using two potential cash payments, T1 and T2. Expenses areincurred at T1 and T2. Total outstanding UPB is decreased as paymentsare received. There are three types of Compliance records “Grey-White”,“Grey-Black” and “Black”. The aggregate cash flows and expenses for eachtype are totaled at the top of the worksheet. Details pertaining toTimings, Expenses, and an illustrative Example describing methodologyare summarized in Appendix—A.

LITIGATION WITH RESTRUCTURED LOANS 246

[0093] Litigation With Restructured loans are contained in the“LitigateWRes” 246 tab. Litigation With Restructured loans strategyinvolves a cash payment “T1” and a possible stream of future paymentsassociated with the new restructured loan.

[0094] The cash flows that result from this strategy are contained intwo sections of the worksheet. The first section contains the T1 cashpayment and the principle payments associated with the loan. Thissection also contains a cash payment associated with any remainingprinciple value beyond the term of the analysis (48 months), theremaining value is discounted back at a separate “Residual valuediscount rate” located on the assumptions sheet. Principle payments arecalculated using the PPMT excel function. The second section containsthe interest payments associated with the loan. The interest rate isobtained from the “Assumed interest rate (Monthly)” value on theassumptions sheet. The IPMT excel function is used to calculate theinterest portion of the cash flow stream. Details pertaining to PPMT andIPMT functions, Timings, Expenses, and an illustrative Exampledescribing methodology are summarized in Appendix—A.

LITIGATION WITH FORECLOSURE 244

[0095] Litigation With Foreclosure records are contained in the“LitigateForeClose” 244 tab. This strategy involves two events “T1” and“T2”. Ti can be either the event of obtaining ownership via foreclosureor obtaining ownership and selling the property in the same event. If T1is a sales transaction then there would be no T2 event. T2 will occurwhen the obtaining ownership event and sales events are at differenttimings. The first section contains the T1 OR T2 cash payment andrepresent the recovered amount associated with the sales transaction.Timings are obtained as part of the underwriting data from the database.Timings are adjusted during the “move data” function utilizing the“Delays by UPB bin” section on the assumptions page. Each record's eventtimings are adjusted based on the UPB bin that the record is associatedwith.

[0096] Expenses are calculated in the second section of the worksheet.Legal expenses are incurred at the time of each event and are calculatedas a percentage of the recovered amount. The percentage used is obtainedfrom the “Legal fees based on % recovered UPB”. In addition to legalexpenses, restate transaction expenses are incurred at each event. Theseexpenses are obtained from the “Closing Costs Table LF and DIL (% ofGDP)” section of the assumptions sheet.

[0097] Some of these expenses are incurred at both events, (Pub Notary,Pub Registry, State Aq. Tax, Appraisal Fee and Brokerage fees) Other aredependent on the “Resecured” and “InLitigation” fields. Other detailspertaining to Litigation With Foreclosure and an illustrative Exampledescribing methodology are summarized in Appendix—A.

[0098] DEED IN LIEU 248

[0099] Deed In Lieu records are contained in the “DeedInLieu” 248 tab.Deed In Lieu strategy involves two events “T1” and “T2”. T1 can beeither the event of obtaining ownership via foreclosure or obtainingownership and selling the property in the same event. If T1 is a salestransaction then there would be no T2 event. T2 will occur when theobtaining ownership event and sales events are at different timings.

[0100] The first section contains the T1 OR T2 cash payment andrepresent the recovered amount associated with the sales transaction.Timings are obtained as part of the underwriting data from the database.They are adjusted during the “move data” function utilizing the “Delaysby UPB bin” section on the assumptions page. Each record's event timingsare adjusted based on the UPB bin that the record is associated with.Other details pertaining to Deed in Lieu and an illustrative Exampledescribing methodology are summarized in Appendix—A.

[0101]FIG. 10 is an exemplary embodiment of a spreadsheet 260 depictingthe raw data, which were inputted into database 178. The data issegregated by a borrower identification number, a loan identificationnumber, an asset type and other related attributes.

[0102]FIG. 11 is an exemplary embodiment of an Assumption Sheet 270 alsoreferred to as Assumption Data Sheet or Assumption Worksheet.Appropriate assumptions are stored in database 20 and are retrieved asnecessary. Expected Cash flow and Net Present Value (NPV) are computedbased on received cash flow information, expenses and timings. Theactual data are utilized as and when possible. However, when actual dataare not available, model 180 retrieves necessary data from theassumption worksheet, shown in FIG. 11 to complete the analysis.Assumption worksheet includes assumptions related to many differentvariables including, but not limited to, Disposition Discount Rates,Value Added Tax Rates, Set Up Costs, Conversion and Loan RegistrationCosts, Asset Management expenses, Legal Fees based on Recovered Amount,Closing Costs related to Different Disposition Types, Various DifferentRates and Factors, Economic Data, Sensitivity Assumptions and FinancialVariables that are necessary in performing financial analysis.Assumptions are also changed by the user to control disposition expensesand discount rates.

[0103]FIG. 12 is an exemplary embodiment of a spreadsheet 280 depictinga roll up disposition cash flow into portfolio cash flow. In thisexample, each disposition cash flow 282 and expense 284 totals arelinked to develop overall portfolio roll up cash flow 286. Portfoliocash flow 286 is made up of cash flows from various disposition typesincluding, but not limited to, Discounted Cash Payment or Discounted PayOff (DPO) Disposition 288, Inferred Disposition 290, Loan RestructureDisposition 292, Compliance Disposition 294, Litigation with RestructureDisposition 296, Litigation with Foreclosure Disposition 298, and DeedIn Lieu Disposition 300. Global expenses and discount rate assumptionsare applied from assumption worksheet 302 (also shown in FIG. 11). MonteCarlo Simulation Model 114 is used to test the impact of the uncertaintyassociated with assumptions. Results are exported in a pre-determinedformat to feed the financial modeling process (shown in FIG. 14).

[0104]FIG. 13 is an exemplary simulation results. FIG. 13 depicts aspreadsheet 320 identifying Cash flows relating to each disposition type322, Expenses related to each disposition type 324, Total Cash Flow 326,Total Expenses 328, Net Present Value (NPV) 330, Bid Price 332, and anInternal Rate of Return (IRR) 334. Cash flows and expenses aresegregated over a specific period, i.e. month by month 336. Pop upwindows 340 allow the user to view the results relating to IRR and TimeAdjusted NPV and help forecast the success of a specific bid.

[0105]FIG. 14 is an exemplary embodiment of a spreadsheet 350 showingpossible result distributions 354 based on uncertainty and variabilityof future cash flows. Spreadsheet 350 also depicts sensitivity analysis358 on key input parameters.

[0106] While the invention has been described in terms of variousspecific embodiments, those skilled in the art will recognize that theinvention can be practiced with modification within the spirit and scopeof the claims.

[0107] APPENDIX—A

[0108] Calculations for the individual disposition types enclosed hereare general in form and can easily be modified to reflect slight changesin disposition structure from deal to deal.

[0109] DPO—Discounted Pay Off—strategy involves two potential cashpayments, timing 1 (T1) and timing 2 (T2). Expenses are incurred at T1and T2. Total outstanding Unpaid balance (UPB) is decreases as paymentsare received. There are two types of DPO records Easy and Hard DPOs, Theaggregate cash flows and expenses for each type are totaled at the topof the worksheet.

[0110] Timings:

[0111] Timings are obtained as part of the underwriting data from thedatabase. They are adjusted during the “move data” function utilizingthe “Delays by UPB bin” section on the assumptions page. Each record'spayment and expense timings are adjusted based on the UPB bin that therecord is associated with.

[0112] Expenses:

[0113] Legal expenses are incurred at the time of the cash payments.These expenses are calculated as a percentage of the recovered amount.The percentage used is obtained from the “Legal fees based on %recovered UPB” . DPO expenses are calculated during the “move data”function and placed in the expense section of the DPO tab according thepayment timing.

[0114] All legal expense are adjusted using the Value added tax (VAT)tax also located on the assumptions page.

[0115] EXAMPLE:

[0116] Expected Recovery (ER)=$842,238, T1=12 months, T2=18 monthsReSecured=1 a secured loan flag:

[0117] Results:

[0118] Cash payment at Time 12 of 421,119

[0119] Cash payment at Time 18 of 421,119

[0120] Expenses:

[0121] T1 Legal—Lookup in legal ReSecured 421,119=13.8%; Expense=58,114

[0122] T2 Legal—Lookup in legal ReSecured 421,119=13.8%; Expense=58,114

[0123] These values are calculated and placed in the correct timing slotin on the DPO tab during the move data function execution.

[0124] Inferred records are generated via proprietary technology andinvolve two potential cash payments, T1 and T2. Expenses are incurred atT1 and T2. Total outstanding UPB is decreases as payments are received.The aggregate cash flows and expenses are totaled at the top of theworksheet.

[0125] Timings:

[0126] Timings are obtained as part of the underwriting data from thedatabase. They are adjusted during the “move data” function utilizingthe “Delays by UPB bin” section on the assumptions page. Each record'spayment and expense timings are adjusted based on the UPB bin that therecord is associated with.

[0127] Expenses:

[0128] Legal expenses are incurred at the time of the cash payments.These expenses are calculated as a percentage of the recovered amount.The percentage used is obtained from the “Legal fees based on %recovered UPB”. Inferred expenses are calculated during the “move data”function and placed in the expense section of the Infer tab accordingthe payment timing.

[0129] All legal expense are adjusted using the VAT tax also located onthe assumptions page.

[0130] EXAMPLE:

[0131] ER=$1,092.52, T1=26, T2=48 ReSecured=1:

[0132] Results

[0133] Cash payment at Time 26 of 1073

[0134] Cash payment at Time 48 of 19.51

[0135] Expenses:

[0136] T1 Legal—Lookup in legal ReSecured 1073=23%; Expense=246.8

[0137] T2 Legal—Lookup in legal ReSecured 19.51=23%; Expense=4.487

[0138] Compliance records refer to questionable borrowers due to legalof other circumstances and are handled in the same fashion as the DPOstrategy using two potential cash payments, T1 and T2. Expenses areincurred at T1 and T2. Total outstanding UPB is decreases as paymentsare received. There are three types of Compliance records “Grey-White”,“Grey-Black” and “Black”, The aggregate cash flows and expenses for eachtype are totaled at the top of the worksheet.

[0139] Timings:

[0140] Timings are obtained as part of the underwriting data from thedatabase. They are adjusted during the “move data” function utilizingthe “Delays by UPB bin” section on the assumptions page. Each record'spayment timings are adjusted based on the UPB bin that the record isassociated with.

[0141] Expenses:

[0142] Legal expenses are incurred at the time of the cash payments.These expenses are calculated as a percentage of the recovered amount.The percentage used is obtained from the “Legal fees based on %recovered UPB”. Compliance record expenses are calculated during the“move data” function and placed in the expense section of the Compliancetab according the payment timing.

[0143] All legal expense are adjusted using the VAT tax also located onthe assumptions page.

[0144] EXAMPLE:

[0145] ER=$2,675,443, T1=18, ReSecured=1:

[0146] Results:

[0147] One cash payment at Time 18 of 2,675,443

[0148] Expenses:

[0149] T1 Legal—Lookup in legal ReSecured 2,675,443=7.59%;Expense=203,066

[0150] Restructured loans are contained in the “Restruct” tab. Thisstrategy involves a possible cash payment “T1” and a stream of futurepayments associated with the new restructured loan. The restructuredloan may involve a principle moratorium period where in only interestpayments are made.

[0151] Cash Flows:

[0152] The cash flows that result from the restructured loan arecontained in two sections of the worksheet. The first section containsthe T1 cash payment and the principle payments associated with the loan.This section also contains a cash payment associated with any remainingprinciple value beyond the term of the analysis (48 months), theremaining value is discounted back at a separate “Residual valuediscount rate” located on the assumptions sheet. Principle payments arecalculated using the PPMT excel function.

[0153] The format of the PPMT function is:

[0154] Returns the payment on the principal for a given period for aninvestment based on periodic, constant payments and a constant interestrate.

[0155] Syntax:

[0156] PPMT(rate,per,nper,pv,fv,type)

[0157] Rate is the interest rate per period.

[0158] Per specifies the period and must be in the range 1 to nper.

[0159] Nper is the total number of payment periods in an annuity.

[0160] Pv is the present value ¾ the total amount that a series offuture payments is worth now.

[0161] Fv is the future value, or a cash balance you want to attainafter the last payment is made. If fv is omitted, it is assumed to be 0(zero), that is, the future value of a loan is 0.

[0162] Type is the number 0 or 1 and indicates when payments are due.

[0163] Set type equal to If payments are due (0 or omitted At the end ofthe period, 1 At the beginning of the period)

[0164] PPMT(Assumptions!$D$5,($L$19:$BG$19)-$F21,($G21-$F21),$E21,0,0)

[0165] This is applied only if the period/month falls within the loanperiod. Assumptions!$D$5 = monthly interest rate ($L$19:$BG$19)-$F21 =This period/month minus the period/month that the interest only paymentsend. ($G21-$F21) = Length of loan -Nper- last payment timing minus endof interest only period. $E21 = Lon Amount 0 = FV = 0 0 = Paymentreceived at end of period.

[0166] The second section contains the interest payments associated withthe loan. The interest rate is obtained from the “Assumed interest rate(Monthly)” value on the assumptions sheet. The IPMT excel function isused to calculate the interest portion of the cash flow stream.

[0167] The format of the IPMT function is:

[0168] Returns the interest payment for a given period for an investmentbased on periodic, constant payments and a constant interest rate. For amore complete description of the arguments in IPMT and for moreinformation about annuity functions, see PV.

[0169] Syntax

[0170] IPMT(rate,per,nper,pv,fv,type)

[0171] Rate is the interest rate per period.

[0172] Per is the period for which you want to find the interest andmust be in the range 1 to nper.

[0173] Nper is the total number of payment periods in an annuity.

[0174] Pv is the present value, or the lump-sum amount that a series offuture payments is worth right now.

[0175] Fv is the future value, or a cash balance you want to attainafter the last payment is made. If fv is omitted, it is assumed to be 0(the future value of a loan, for example, is 0).

[0176] Type is the number 0 or 1 and indicates when payments are due. Iftype is omitted, it is assumed to be 0.

[0177] IPMT(Assumptions!$D$5,($BK$19:$DF$19)-D21,($G21-$D21),$E21)

[0178] This is applied only if a interest payment month is encountered.Assumptions!$D$5 = monthly interest rate ($BK$19:$DF$19)-D21 = Thisperiod/month minus the T1 period/month that represent the start of theloan. ($G21-$D21) = The length of the loan period $E21 = The LoanAmount. Omitted = FV = 0. Omitted = Payment received at end of period.

[0179] Timings:

[0180] Timings are obtained as part of the underwriting data from thedatabase. They are adjusted during the “move data” function utilizingthe “Delays by UPB bin” section on the assumptions page. Each record'spayment timings are adjusted based on the UPB bin that the record isassociated with.

[0181] T1 is the timing of the cash payment.

[0182] T1+MonthsOfFinancing field=length of loan.

[0183] T1+MonthsOfPrincMoratorium=length of interest only period.

[0184] Expenses:

[0185] Legal expenses are incurred at the time of the cash payment andat the start of the principle payment period and are calculated as apercentage of the recovered amounts (Cash Payment at T1 and the LoanAmount). The percentage used is obtained from the “Legal fees based on %recovered UPB”.

[0186] All legal expense are adjusted using the VAT tax also located onthe assumptions page.

[0187] EXAMPLE:

[0188] ER=$819,285, T1=9, T2=12, ReSecured=0:

[0189] Results:

[0190] One cash payment at Time 9 of 40,964

[0191] Loan start Principle+lnterest Time 12, loan Amount=778,320

[0192] Expenses:

[0193] T1 Legal—Lookup in legal Not secured 40,964=28.75%;Expense=11,777

[0194] T2 Legal—Lookup in legal Not secured 778,320=11.5%;Expense=89,507

[0195] Litigation With Restructured loans are contained in the“LitigateWRes” tab. This strategy involves a cash payment “T1” and apossible stream of future payments associated with the new restructuredloan.

[0196] Cash Flows:

[0197] The cash flows that result from this strategy are contained intwo sections of the worksheet. The first section contains the T1 cashpayment and the principle payments associated with the loan. Thissection also contains a cash payment associated with any remainingprinciple value beyond the term of the analysis (48 months), theremaining value is discounted back at a separate “Residual valuediscount rate” located on the assumptions sheet. Principle payments arecalculated using the PPMT excel function.

[0198] The format of the PPMT function is:

[0199] Returns the payment on the principal for a given period for aninvestment based on periodic, constant payments and a constant interestrate.

[0200] Syntax:

[0201] PPMT(rate,per,nper,pv,fv,type)

[0202] Rate is the interest rate per period.

[0203] Per specifies the period and must be in the range 1 to nper.

[0204] Nper is the total number of payment periods in an annuity.

[0205] Pv is the present value of the total amount that a series offuture payments is worth now.

[0206] Fv is the future value, or a cash balance you want to attainafter the last payment is made. If fv is omitted, it is assumed to be 0(zero), that is, the future value of a loan is 0.

[0207] Type is the number 0 or 1 and indicates when payments are due.

[0208] Set type equal to If payments are due (0 or omitted At the end ofthe period, 1 At the beginning of the period)

[0209] PPMT(Assumptions!$D$5,($M$19:$BH$19)-$F21,($G21-$F21),$E21,0,0)

[0210] This is applied only if the period/month falls within the loanperiod. Assumptions!$D$5 = monthly interest rate ($M$19:$BH$19)-$F21 =This period/month minus the period/month that the interest only paymentsend. ($G21-$F21) = Length of loan -Nper- loan end minus loan start. $E21= Lon Amount 0 = FV = 0 0 = Payment received at end of period.

[0211] The second section contains the interest payments associated withthe loan. The interest rate is obtained from the “Assumed interest rate(Monthly)” value on the assumptions sheet. The IPMT excel function isused to calculate the interest portion of the cash flow stream.

[0212] The format of the IPMT function is: Returns the interest paymentfor a given period for an investment based on periodic, constantpayments and a constant interest rate. For a more complete descriptionof the arguments in IPMT and for more information about annuityfunctions, see PV.

[0213] Syntax

[0214] IPMT(rate,per,nper,pv,fv,type)

[0215] Rate is the interest rate per period.

[0216] Per is the period for which you want to find the interest andmust be in the range 1 to nper.

[0217] Nper is the total number of payment periods in an annuity.

[0218] Pv is the present value, or the lump-sum amount that a series offuture payments is worth right now.

[0219] Fv is the future value, or a cash balance you want to attainafter the last payment is made. If fv is omitted, it is assumed to be 0(the future value of a loan, for example, is 0).

[0220] Type is the number 0 or 1 and indicates when payments are due. Iftype is omitted, it is assumed to be 0.

[0221] IPMT(Assumptions!$D$5,($BK$19:$DF$19)-D21,($G21-$D21),$E21)

[0222] This is applied only if a interest payment month is encountered.Assumptions!$D$5 = monthly interest rate ($BK$19:$DF$19)-D21 = Thisperiod/month minus the T1 period/month that represent the start of theloan. ($G21-$D21) = The length of the loan period $E21 = The LoanAmount. Omitted = FV = 0. Omitted = Payment received at end of period.

[0223] Timings:

[0224] Timings are obtained as part of the underwriting data from thedatabase. They are adjusted during the “move data” function utilizingthe “Delays by UPB bin” section on the assumptions page. Each record'spayment timings are adjusted based on the UPB bin that the record isassociated with.

[0225] T1 is the timing of the cash payment.

[0226] T1+MonthsOfFinancing field=length of loan.

[0227] T1+MonthsOfPrincMoratorium=length of interest only period.

[0228] Expenses:

[0229] Legal expenses are incurred at the time of the cash payment andat the start of the principle payment period and are calculated as apercentage of the recovered amounts (Cash Payment at T1 and the LoanAmount). The percentage used is obtained from the “Legal fees based on %recovered UPB”.

[0230] All legal expense are adjusted using the VAT tax also located onthe assumptions page.

[0231] EXAMPLE:

[0232] ER=$9,134,497, T1=36, ReSecured=0

[0233] Results:

[0234] One cash payment at Time 36 of $9,134,497.

[0235] Expenses:

[0236] T1 Legal—Lookup in legal Not secured 9,134,497=4.60%;Expense=$420,187

[0237] Litigation With Foreclosure records are contained in the“LitigateForeClose” tab. This strategy involves two events “T1” and“T2”. T1 can be either the event of obtaining ownership via foreclosureor obtaining ownership and selling the property in the same event. If T1is a sales transaction then there would be no T2 event. T2 will occurwhen the obtaining ownership event and sales events are at differenttimings.

[0238] Cash Flows:

[0239] The first section contains the T1 OR T2 cash payment andrepresent the recovered amount associated with the sales transaction.

[0240] Timings:

[0241] Timings are obtained as part of the underwriting data from thedatabase. They are adjusted during the “move data” function utilizingthe “Delays by UPB bin” section on the assumptions page. Each record'sevent timings are adjusted based on the UPB bin that the record isassociated with.

[0242] NOTE: Any Timing beyond 48 months will occur in the 48th month.

[0243] Expenses:

[0244] Expenses are calculated in the second section of the worksheet.

[0245] Legal expenses are incurred at the time of each event and arecalculated as a percentage of the recovered amount. The percentage usedis obtained from the “Legal fees based on % recovered UPB”.

[0246] In addition to legal expenses, restate transaction expenses areincurred at each event. These expenses are obtained from the “ClosingCosts Table LF and DIL (% of GDP)” section of the assumptions sheet.some of these expenses are incurred at both events, (Pub Notary,PubRegistry,State Aq. Tax, Appraisal Fee and Brokerage fees)

[0247] Other are dependent on the Resecured and InLitigation fields:

[0248] If the record is Real-estate secured ReSecured=1 then Certificatefiling fees apply

[0249] If the record is in litigation InLitigation=1 then LitigationPublishing fees apply at T1

[0250] If the record is NOT in litigation InLitigation=0 then NewLitigation fees apply at T1

[0251] NOTE: Any Timing beyond 48 months will occur in the 48th month.

[0252] All legal expense are adjusted using the VAT tax also located onthe assumptions page.

[0253] EXAMPLE:

[0254] ER=$1,066,835, T1=39, T2=51, ReSecured=0, InLitigation=1:

[0255] Results:

[0256] One cash payment at Time 48 of $1,066,835.

[0257] Expenses:

[0258] T1 Legal—Lookup in legal Not secured 1,050,000=5.75%;Expense=$61,343

[0259] Closing—1,050,000 * 3.6212%(sum of Pub Notary, Pub Registry,State Aq. Tax, Appraisal Fee)=$38,632

[0260] Plus Litigation Publishing cost of $1,438

[0261] Total T1 expenses=$101,413

[0262] T2 Legal—Lookup in legal Not secured 1,050,000=5.75%;Expense=$61,343

[0263] Closing—1,050,000*4.4338%(Brokerage fee)=$47,301

[0264] Total T2=$108,644

[0265] Deed In Lieu records refer to cases where deed to property isobtained in lieu of loan repayment and are contained in the “DeedinLieu”tab. This strategy involves two events “T1” and “T2”. T1 can be eitherthe event of obtaining ownership via foreclosure or obtaining ownershipand selling the property in the same event. If T1 is a sales transactionthen there would be no T2 event. T2 will occur when the obtainingownership event and sales events are at different timings.

[0266] Cash Flows:

[0267] The first section contains the T1 OR T2 cash payment andrepresent the recovered amount associated with the sales transaction.

[0268] Timings:

[0269] Timings are obtained as part of the underwriting data from thedatabase. They are adjusted during the “move data” function utilizingthe “Delays by UPB bin” section on the assumptions page. Each record'sevent timings are adjusted based on the UPB bin that the record isassociated with.

[0270] NOTE: Any Timing beyond 48 months will occur in the 48th month.

[0271] Expenses:

[0272] Expenses are calculated in the second section of the worksheet.

[0273] Legal expenses are incurred at the time of each event and arecalculated as a percentage of the recovered amount. The percentage usedis obtained from the “Legal fees based on % recovered UPB” .

[0274] In addition to legal expenses, restate transaction expenses areincurred at each event. These expenses are obtained from the “ClosingCosts Table LF and DIL (% of GDP)” section of the assumptions sheet.some of these expenses are incurred at both events, (Pub Notary, PubRegistry, State Aq. Tax, Appraisal Fee and Brokerage fees)

[0275] Other are dependent on the Resecured and InLitigation fields:

[0276] If the record is Real-estate secured ReSecured=1 then Certificatefiling fees apply

[0277] If the record is in litigation InLitigation=1 then LitigationPublishing fees apply at T1

[0278] If the record is NOT in litigation InLitigation=0 then NewLitigation fees apply at T1

[0279] NOTE: Any Timing beyond 48 months will occur in the 48th month.

[0280] All legal expense are adjusted using the VAT tax also located onthe assumptions page.

[0281] EXAMPLE:

[0282] ER=$1,050,000, T1=27, T2=51, ReSecured=0, InLitigation=1:

[0283] Results:

[0284] One cash payment at Time 48 of 1,050,000.

[0285] Expenses:

[0286] T1 Legal—Lookup in legal Not secured deedInLieu 1,050,000=5.75%;Expense=60,375

[0287] Closing—1,050,000*3.6212%(sum of Pub Notary, Pub Registry, StateAq. Tax, Appraisal Fee)=$38022

[0288] Plus Litigation Publishing cost of $1,438

[0289] Total T1 expenses=99,835

[0290] T2 Legal—Lookup in legal Not secured deedinLieu 1,050,000=5.75%;Expense=60,375

[0291] Closing—1,050,000*4.4338%(Brokerage fee)=$46555

[0292] Total T2=$106,930

What is claimed is:
 1. A method for analyzing a deal that includesportfolios of distressed financial assets, using a network-based systemincluding a server system coupled to a centralized database and at leastone client system, said method comprising the steps of: generating acash flow data table from various data sources; importing cash flow datafrom the data table into a cash flow model; automatically segmentingcash flow data by potential asset disposition types utilizing the cashflow model; applying disposition specific cash flow and expense timingsand rolling up discounted projections to develop cash flow projectionsfor the deal; performing sensitivity analysis using a Monte CarloSimulation Model to provide different scenarios based on a variety ofassumptions retrieved from the database; and exporting cash flowprojections into a pre-determined format to develop financiallyattractive bids for the deal that takes into account a variety offoreseeable risks.
 2. A method according to claim 1 wherein said step ofimporting cash flow data further comprises importing cash flow datautilizing an EXCEL VBA program.
 3. A method according to claim 1 whereinthe various data sources include at least one of information relating toa portfolio and its underlying assets, information from loanunderwriters, knowledge captured from previous transactions, andinference data obtained from non-sampled assets.
 4. A method accordingto claim 1 wherein the assumptions are retrieved from assumptionsworksheet within the Cash Flow model.
 5. A method according to claim 4wherein the worksheet within the Cash Flow model are stored on theclient system.
 6. A method according to claim 1 wherein the cash flowmodel allows user controlled queries to segment the portfolio containinga pool of assets.
 7. A method according to claim 1 wherein the potentialasset disposition types are at least one of a Discounted Pay Off (DPO)Disposition, an Inferred Disposition, a Loan Restructure Disposition, aCompliance Disposition, a Litigation with Foreclosure, a Litigation withRestructure Disposition, and a Deed In Lieu Disposition.
 8. A methodaccording to claim 1 wherein potential asset disposition types includemixed dispositions.
 9. A method according to claim 1 wherein the cashflow model with minor adjustments automatically segments cash flow datainto mixed dispositions.
 10. A method according to claim 1 wherein saidstep of performing sensitivity analysis comprises the steps of:developing various assumptions relating to key parameters; inputting thevarious assumptions; and retrieving the various assumptions as requiredto perform sensitivity analysis.
 11. A method according to claim 10wherein said step of developing various assumptions comprises the stepof inputting relevant valuation information to evaluate a portfolio ofassets.
 12. A method according to claim 10 wherein said step ofdeveloping various assumptions comprises the step of inputtingassumptions related to at least one of Disposition Discount Rates, ValueAdded Tax Rates, Set Up Costs, Conversion and Loan Registration Costs,Asset Management expenses, Legal Fees based on Recovered Amount, ClosingCosts related to Different Disposition Types, Various Different Ratesand Factors, Economic Data, Sensitivity Assumptions and other Variablesthat are necessary in performing financial analysis.
 13. A system formanaging portfolio cash valuation, said system comprising: at least oneserver system; at least one client system configured to maintainaccumulated assumptions and knowledge in a repository from prior toportfolio cash evaluation, apply consolidated analytical tools toevaluate portfolio of assets, and generate management reports thatanalyze portfolio; and a network connecting said at least one clientsystem to said server system.
 14. A system according to claim 13 whereinsaid server system is further configured with consolidated analyticaltools including at least one of a Cash Flow Model, a Monte CarloSimulation Model and a Financial Analysis Model.
 15. A system accordingto claim 13 wherein said server system is further configured with asuite of at least one of business processes, computer systems,analytical tools, data manipulation tools, business process tools,methodologies and analytics.
 16. A system according to claim 13 whereinsaid server system is further configured with a database thataccumulates and organizes data relating to at least one Bank Records,Credit Agencies, Government Agencies, Legal Documents and Contracts, andUnderwriting Reports.
 17. A system according to claim 16 wherein theaccumulated data is utilized to generate the cash flow table.
 18. Asystem according to claim 14 wherein said Cash Flow Model is furtherconfigured with Work Sheets and Code Modules to perform the financialanalysis.
 19. A system according to claim 18 wherein said server systemis further configured with at least one of Data Sheets, AssumptionSheets, Cash Flow Sheets, and various Disposition Sheets.
 20. A systemaccording to claim 14 wherein said server system is further configuredto perform sensitivity analysis on projected cash flows utilizing theMonte Carlo Simulation Model.
 21. A system according to claim 13 whereinsaid server system is further configured to: download requestedinformation from said server system; and display requested informationon said client system in response to the inquiry.
 22. A system accordingto claim 13 wherein said server system is further configured to printrequested information in a pre-determined format.
 23. A system accordingto claim 13 wherein said client system is further configured with adisplaying component.
 24. A system according to claim 23 wherein saidclient system is further configured with a sending component to send aninquiry to said server system to process and download the requestedinformation to said client system.
 25. A system according to claim 24wherein the sending component functions in response to a click of amouse button.
 26. A system according to claim 13 wherein said serversystem and client system are further configured to be protected fromaccess by unauthorized individuals.
 27. A computer program embodied on acomputer readable medium to analyze portfolios of assets to improve abidding process to acquire the portfolio of assets, said computerprogram comprising a code segment that: creates a directory structure toorganize information into a centralized database; and provides usersaccess to a specific set of data stored in the centralized database tofacilitate decision making in response to an inquiry.
 28. The computerprogram as recited in claim 27 further including a code segment that:downloads valuation assessment from the database; develops monthlyincome projections from individual loan valuations; develops monthlyexpense projections from pre-determined asset management scenarios;aggregates loan cash flows into portfolio cash flows; adjusts portfoliocash flow expenses against pre-determined asset management targets;calculates financial ratios for asset management planning; simulatesvarious scenarios based on pre-defined assumptions; and calculatesconfidence assessment for portfolio investment.
 29. The computer programas recited in claim 28 further including a code segment that: managesthe information in the centralized database; manages a project timelinewith milestones and tasks arranged in a standardized project managementformat; and provides feedback to various participants to track projectdeliverables.
 30. The computer program as recited in claim 27 furtherincluding a code segment that generates management reports.
 31. Thecomputer program as recited in claim 27 further including a code segmentthat provides flexibility to an administrator to modify user profileinformation.
 32. The computer program as recited in claim 27 furtherincluding a code segment that organizes information within thecentralized database under at least one of a Cash Flow Data Section, aModels Algorithm Section, an Assumptions Section, a Standardized DataSection, and a Worksheets & Code Modules Section.
 33. The computerprogram as recited in claim 27 further including a code segment thatretrieves information by accessing various other links.
 34. A computerprogram embodied on a computer readable medium for facilitating abidding process, said computer program capable to be processed by aserver system coupled to a centralized interactive database and at leastone client system, said computer program comprising: a code segment thatreceives information; a code segment that enters the information into acentralized database; a code segment that stores the information intothe centralized database and cross-references the information againstunique identifiers; a code segment that computes at least one ofInternal Rate of Return of a Portfolio, Weighted Average Portfolio Life,Break Even Point of the Portfolio, Confidence Assessment of thePortfolio Investment, and the Portfolio Liquidation Profile; and a codesegment that provides the information in response to an inquiry.
 35. Thecomputer program as recited in claim 34 wherein the network is a widearea network operable using a protocol including at least one of TCP/IPand IPX.
 36. The computer program as recited in claim 34 wherein theinformation is received from the user via a graphical user interface.37. The computer program as recited in claim 34 further includes a codesegment that provides the information based on access levels.
 38. Thecomputer program as recited in claim 34 further includes a code segmentthat monitors interaction between various collaborators during duediligence.
 39. The computer program as recited in claim 34 furthercomprising a code segment that accesses the centralized database. 40.The computer program as recited in claim 39 further comprising a codesegment that searches the database regarding the specific inquiry. 41.The computer program as recited in claim 40 further comprising: a codesegment that retrieves information from the database; and a code segmentthat causes the retrieved information to be displayed on the clientsystem.
 42. The computer program as recited in claim 35 wherein theclient system and the server system are connected via one of a wide areanetwork, a local area network, an intranet and the Internet.
 43. Thecomputer program as recited in claim 35, and further comprising a codesegment that monitors the security of the system by restricting accessto unauthorized individuals.
 44. A centralized database comprising: datacorresponding to at least one of Cash Flow Data, Assumptions Data,Potential Asset Disposition Type Data, Standardized Data, and Worksheets& Code Modules Data; data corresponding to financial models and businessprocess tools; data corresponding to best practices; and datacorresponding valuation process and underwriting.
 45. A databaseaccording to claim 44 wherein Standardized Data comprises at least oneof Bank Records, Credit Agencies Records, Government Agencies Records,Data from Legal Documents, and Data relating to Underwriting Reports.46. A database according to claim 44 wherein Worksheets & Code ModulesData comprises worksheets and code modules related to financial model.47. A database according to claim 44 wherein Assumptions Data comprisesassumptions related to at least one of Disposition Discount Rates, ValueAdded Tax Rates, Set Up Costs, Conversion and Loan Registration Costs,Asset Management expenses, Legal Fees based on Recovered Amount, ClosingCosts related to Different Disposition Types, Various Different Ratesand Factors, Economic Data, Sensitivity Assumptions and other Variablesthat are necessary in performing financial analysis.
 48. A databaseaccording to claim 44 wherein Potential Asset Disposition Type Data areat least one of a Discounted Pay Off (DPO) Disposition, an InferredDisposition, a Loan Restructure Disposition, a Compliance Disposition, aLitigation with Foreclosure, a Litigation with Restructure Disposition,and a Deed In Lieu Disposition.
 49. A database according to claim 44wherein said database is checked for data integrity frequently andprovides access to individuals based on predefined criteria.
 50. Adatabase according to claim 44 wherein said database further configuredto be protected from access by unauthorized individuals.
 51. A methodfor analyzing a deal that includes portfolios of distressed financialassets, using a network-based system including a server system coupledto a centralized database and at least one client system, said methodcomprising the steps of: calculating each borrower's net present valuewithin a portfolio by utilizing a borrower-level pricing process;analyzing portfolio and sub-set of assets within the portfolio for eachborrower; and calculating pre-determined criteria for sub-set of assetsfor each borrower to determine influence of each borrower's individualprice on the entire portfolio's price by utilizing influence metrics.52. A method for analyzing a deal that includes portfolios of distressedfinancial assets utilizing a borrower level pricing process, said methodcomprising the steps of: calculating a borrower-specific price for eachborrower in the portfolio; determining influence of each borrower on agiven portfolio utilizing influence metrics; and selecting a group ofborrowers based on borrowers individual ranking. for further review. 53.A method according to claim 52 wherein said step of calculating furthercomprises the steps of clearing a database and sorting the database byborrower identification codes.
 54. A method according to claim 53wherein said step of calculating further comprises the steps of rollingup to get the overall contribution by each borrower for a givenportfolio.
 55. A method according to claim 52 wherein the influencemetrics are developed based on historical experience in dealing withvarious portfolios.
 56. A method according to claim 52 wherein theinfluence metrics are utilized to select a most influential borrowerswithin the portfolio.